Trading Places by Charles Goyette

Having a special time of year devoted to giving thanks is one of the finest traditions of the American people. I’ve always believed that blessings counted multiply. My wife and I make a practice of "doing our gratitude" every night, reviewing all the things for which we are grateful.

But in addition to giving thanks, it is important to be clear-eyed and realistic about the things going on in the world around us.

Let’s be frank. Over the last generation, Americans have become poorer. Meanwhile, the Chinese are becoming more-prosperous.

Since the late 1970s, China’s GDP has grown tenfold. But the American story is best encapsulated in a Milken Institute study.

This study revealed that, over the course of 40 years (1969–2009), the median earnings of American men with college degrees fell by 12% in constant (inflation-adjusted) dollars. For men with only a high-school diploma, earnings fell a staggering 47%.

You’ve probably heard it said that all life is a state of flux between opposites. Day becomes night, young becomes old and even the old eventually become, in many ways, much like infants.

In the wisdom traditions of the world, such sayings are found as "every high thing shall be made low," or that yin becomes yang and yang becomes yin.

So maybe we shouldn’t be surprised that America has become less-free – and, necessarily, less-prosperous.

Maybe it can simply be chalked up to the natural rhythm of things, the ebb and flow of life. Or as the old preacher Ecclesiastes (and Pete Seeger and the Byrds) put it, "To everything there is a season, turn, turn, turn."

And maybe it shouldn’t be surprising that people in China and much of the rest of the world have struggled out from under the boot of the state and, becoming more-free, are also becoming more-prosperous.

Wouldn’t it be a sad irony – sad for us, anyway – if the outcome of this dynamic should be that China increasingly embraces free markets and economic freedom, while the United States continues its downward spiral into statism?

Monetary policy remains in the hands of money-printing Keynesians like Ben Bernanke, while Americans were forced to choose between the two Keynesian presidential candidates – Barack Obama and Mitt Romney. Yet in China, policy-makers have begun welcoming and listening to a more-sensible voice.

A recent Wall Street Journal story says that – three years ago when Keynesian economic interventionism and stimulus spending was all the rage in Beijing and another predictable asset bubble was building in China – Zhang Weiying, who teaches at Peking University, was sounding like Ludwig von Mises, Murray Rothbard and F.A. Hayek and giving speeches titled "Bury Keynesianism."

Predictably, the Keynesians stimulus spending failed. The turn of events, says the Journal, was "a poster child for Mr. Zhang’s Austrian theories."

" ... the sheer size of the failure suddenly has people paying attention. ‘The Keynesian policy didn’t deliver what it promised,’ [Zhang] says, so ‘more and more people realize that ... when the government makes investment [in] something that’s useless, recession will come.’

"Chinese officials no longer treat Mr. Zhang as a pariah. He reports that Ministry of Agriculture officials tell him they enjoy reading his articles. Other ministries and local governments, including in Henan and Liaoning provinces, invite him to speak.

"He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai – a fairly high-level apparatchik – told him he liked it."

The Keynesian experience has never delivered what it promised in this country, either. Not in the Great Depression of the 1930s. Not in the stagflation of the 1970s. And not now.

The Keynesian approach has, however, produced a debt colossus even as it has trashed the currency. Not quite what we would have wanted.

China still has a long way to go on the muddy road to freedom. But it has come a long way since the reformer Deng Xiaoping started making changes in 1979.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America’s Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.'s political scene and economic climate. To learn more, go here.